Man who touted North Dakota ethanol plant in trouble in IowaGRAFTON, N.D. (AP) — An Iowa man who spoke to North Dakota farmers last year about supplying sugar beets for an ethanol plant in the Red River Valley has been ordered by regulators in his home state to stop soliciting investments for Energae LP.
GRAFTON, N.D. (AP) — An Iowa man who spoke to North Dakota farmers last year about supplying sugar beets for an ethanol plant in the Red River Valley has been ordered by regulators in his home state to stop soliciting investments for Energae LP.
That company last year said it planned to buy the shuttered Alchem Ltd. ethanol-from-corn plant in the northeastern North Dakota city of Grafton and refurbish it to turn beets into the alternative fuel. At a March 2012 meeting in Grafton, Darrell Smith told area farmers that investing a minimum of $10,000 would give them the right to deliver a minimum of 20 acres of beets for processing at the plant. The project never materialized and the plant is now being dismantled.
The Iowa Insurance Division accuses Smith, of Forest City, Iowa, of improperly handling sales of securities — some of which involved Energae — and they have suspended his insurance license. Officials told Agweek that Smith, of Forest City, Iowa, could face a $10,000 fine. He has about a month to request a hearing.
Smith said he plans to challenge the ruling.
"I've put my whole life into making this work," he said. "There are just a few things left to do. People get antsy."
Tom Alger, a spokesman for the Iowa Insurance Division, told The Associated Press that the agency does not have the power to prosecute and could not comment on whether the case had been referred elsewhere for criminal investigation. He said the actions taken were within the discipline powers of the agency.
A spokesman for the state Attorney General's office would not confirm if a criminal investigation was underway.
Smith's attorney, Kathryn Barnhill of West Des Moines, Iowa, said no securities laws have been broken and that the company is "on the verge of becoming very successful and very profitable."
Iowa Insurance Division officials allege that since 2008, Smith has invested insurance client money without their consent in Energae and Interested Investors Trust/I-Lenders, which shares an office address with Energae in Cedar Lake, Iowa. Regulators believe Smith has spent the money on personal needs.
Alchem Ltd. opened the Grafton plant in 1985 and closed it in 2007. It later was sold at auction. In March 2012, Energae pursued buying the plant from a group called Northeast Energy LLC, and local officials expressed hope the plant would start operating again and restore the 30 jobs that had been lost in the city of about 4,500 people.